A senior commodity strategist at ANZ Bank is predicting a strengthening market for iron ore, Australia’s single largest export.
Daniel Hynes said improving fundamentals in China, such as an uplift in housing construction and rapidly diminishing iron ore stockpiles, are helping keep prices above US$ 50 a tonne.
Prices have moved rapidly since the beginning of the year, when they stood at around US$ 43 a tonne, before surging to over $ 70 in late April, then settling at around $ 55 a tonne.
Cuts in production by BHP Billiton and Rio Tinto combined with stronger than forecast demand from China to push the prices up, and My Hynes believes continuing demand will allow iron ore to keep a large percentage of the gains made.
“Despite rising speculation in Chinese futures contracts,” he said, “we are not expecting prices to push back below US$50 a tonne on a sustainable basis.”